U.S. Labor Market Expected To Tighten In Coming Months

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In its June Employment Trends Index (ETI), The Conference Board reports a slight decrease compared to May, when it registered an increase. The index stands at 133.07 for June, down from 133.32 the month before. Compared to one year ago, however, June’s reading represents a 4.6-percent uptick.

“Despite the June decline in the Employment Trends Index, job growth will remain strong in the coming months. The decline is small and comes after a series of large increases since early 2017,” says Gad Levanon, chief economist, North America, at The Conference Board. “Further job growth in the coming months will continue to tighten the labor market, and will likely result in further wage acceleration later this year.”

In calculating its Employment Trends Index, The Conference Board aggregates eight labor-market indicators that it considers accurate in their own areas. Aggregating indicators into a composite index filters out “noise,” more clearly revealing trends within the data. The indicators come from the U.S. Department of Labor, the U.S. Bureau of Labor Statistics, the Federal Reserve Board and other sources.

The decrease in the Employment Trends Index observed in June is attributed to negative performances by three of the eight components. In order from the largest negative contributor to the smallest, these were: the percentage of firms with positions not able to fill right now, the ratio of involuntarily part-time to all part-time workers, and initial claims for unemployment insurance.

Other indicators aggregated into the index include the percentage of respondents who say they find “jobs hard to get”; the number of employees hired by the temporary-help industry and the number of job openings, as reported by the U.S. Bureau of Labor Statistics; the Federal Reserve Board’s figures on industrial production; and real manufacturing and trade sales, as reported by the U.S. Bureau of Economic Analysis.

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